"Threat to house buyers and environment in Chancellor?s Euro plans" says Lilley

- Monday, 16th June 2003

 

Just days after Gordon Brown?s announcement to Parliament, new dangers to homeowners from joining the Euro are already becoming clear.?? Hidden in the small print of the 1,738 pages the Chancellor published last week is an admission that stamp duty may have to go up if we join the Euro and that he will steamroller through housebuilding plans against local wishes- a threat to Hertfordshire?s green belt.????

Peter Lilley said:? "The Chancellor thinks that our housing market could stand in the way of Labour?s euro obsession.?? He is therefore looking at a variety of measures, including a big increase in stamp duty.????? We only need to look at housing taxes in other European countries to see what this might mean for us.???? The average of property taxes in France, Germany, Italy and Spain is equivalent to a stamp duty rate of just over 5 per cent.??? In Britain, stamp duty is currently just 1 per cent of the purchase price for houses up to ?250,000.??

"The Chancellor also said that the government is undertaking further significant changes in the planning system, supply of housing and housing finance which will increase the housing market?s compatibility with the Euro area.???? The Council for the Protection of Rural England (CPRE) has warned that these proposals could see a further erosion of the greenbelt.?? This could be particularly damaging for us in Hertfordshire.?? Labour is prepared to play politics with the environment as well as the economy to increase the housing market?s compatibility with the Euro area."

ENDS

Notes
Average house prices by region
Region? Average price?? Stamp duty payable now? Stamp duty payable if 5%??????? Extra cost to homebuyers???????
S.East? ?195,700??????? ?1957?? ?9785?? ?7828??
U.K.??? ?124,770??????? ?1248?? ?6239?? ?4991??
(Source: Prices from Halifax regional house price data, all houses, all buyers, seasonally adjusted, Q1 2003, stamp duty calculations derived from house price data)

Further notes

The Treasury?s document, Housing consumption and EMU, contains the following information on transaction costs. The information on international stamp duty equivalent rates comes from a House of Commons Library Standard Note.

In France, registration duty for property stands at around 5-6 per cent on the purchase price and other costs. In total, the Treasury report says that total transaction costs for the purchase of an ?80,000 house are 13.8 per cent of the purchase price, or ?10,720.

In Germany, property transfer tax is 3.5 per cent on the purchase price. In total, the Treasury report estimates that the total transaction costs for the purchase of an ?80,000 house are 7.1 per cent of the purchase price, or ?5680.

In Italy, registration tax is 8 per cent on the market value. In total, the Treasury report estimates that the total transaction costs for the purchase of an ?80,000 house are 7.4 per cent of the purchase price, or ?5920.

And in Spain, capital transfers tax is 3.5 per cent of the real value. In total, the Treasury report estimates that the total transaction costs for the purchase of an ?80,000 house are 10.4 per cent of the purchase price, or ?8320.

In Britain, stamp duty is just 1 per cent of the purchase price for houses up to ?250,000. The Treasury report estimates that the total transaction costs for the purchase of an ?80,000 house is just 2 per cent of the purchase price, or ?1600.

Additional Notes

??????? ?UK Membership of the Single Currency: An Assessment of the Five Economic Tests?, published on Monday, says: ?the Government is undertaking further significant changes in the planning system, supply of housing and housing finance...[which will] increase the housing markets compatibility with the euro area.? (p26)

??????? The document goes on to talk of ?tough and credible measures, including intervention, where local authorities are not delivering housing numbers in high demand areas; and exploring whether, in the medium term, achieving the Government?s objective will require a system of binding local plans? (p27)

??????? The Daily Telegraph reports: ?The Council for the Protection of Rural England said that the increase in housebuilding would eat further into diminishing greenfield sites in already highly populated areas.? (Daily Telegraph, 10 June 2003)

??????? ?Fiscal Stabilisation and EMU?, one of the 18 studies published by the Treasury on Monday, discusses how the Government could attempt to use taxes to stabilise the economy once interest rates could no longer be set on the basis of Britain?s economic needs.? It says: ?One option would be to extend the regulator power to additional taxes, such as stamp duty...More broadly, tax instruments affecting the housing market have some immediate appeal for a number of reasons...For example, stamp duty could be raised during a period of rapid house price increases.? (p86)????

 

 

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